3 Banking Habits of Millionaires

When you think about millionaires, you might assume they spend their time in private jets, flying around the world sipping champagne, and snacking on caviar. The reality is that many self-made millionaires got there by being frugal, making consistent investments, and avoiding unnecessary spending.

But what can we learn from their banking habits? Here are three that many of us can emulate. 

1. Millionaires have easily accessible cash in case they need it

If there's one piece of money wisdom I've heard more than any other, it is this: You need an emergency fund. A Capgemini survey of 3,000 high-net-worth individuals early last year showed that they held 34% of their money in cash or cash equivalents. That figure was higher than in previous years because higher interest rates have made savings accounts more attractive. 

Having three to six months of living expenses socked away in a high-interest savings account cushions you against the unexpected. That cash is there in case you lose your job or have to cover a medical expense. It can help you avoid taking on high-interest debt, reduce stress, and invest with a long-term perspective. 

What it means for you: If you're already worried about how to cover your essential bills each month, an emergency fund may seem like an unattainable luxury. It's certainly much easier to build that kind of financial security when you have money to spare. 

Even so, many of us can put some cash aside for emergencies. You don't need to pull those savings out of a hat overnight. And having even something saved is better than nothing. Check out our top high-yield savings accounts to find a good home for your savings.

Look over your recent bank statements and see if you might be able to cut $10 or $20 from your spending. Perhaps there's a subscription you aren't using or some spending areas you could cut back on. If you put $10 a week into your savings account, you'll have $500 within a year. That's a great start.

2. Millionaires check their balances

Tom Corley interviewed hundreds of millionaires and non-millionaires for his book Rich Habits, Poor Habits. He found that 96% of self-made millionaires balanced their checkbooks every month. You don't see many checkbooks in use these days, but the process of tracking your transactions and making sure everything adds up is still a useful banking habit.

READ MORE: Best Checking Accounts

What it means for you: Schedule regular times to check in with your finances. I have repeating calendar entries with reminders so I don't forget. You'll be able to avoid overdraft fees and be confident that you have enough money to meet your obligations. If you're trying to pay down debt, build your retirement fund, or save for a specific goal, it's a great way to make sure you're on track. You'll also notice any fraud or bank errors and be able to take action quickly. 

Online banking makes it easier than ever to keep track of your money. You can view your balance, check recent statements, and transfer money at the click of a button. If you have several accounts, consider connecting them to a budgeting app so you can see all your activity in one place. 

3. Millionaires avoid credit card debt

According to Corley's research, only 3% of self-made millionaires carry a balance on their credit cards. Credit cards often charge high rates of interest, which means carrying a balance can be costly. When you are building wealth, every dollar counts. If you're spending money on interest payments, that's money you can't invest or save for the future. 

Millionaires use their credit cards. Over 90% of self-made millionaires said they had credit card rewards points or dollars. But they pay their balances off at the end of each cycle, so they get the benefits of a card without the interest costs.

What it means for you: If you carry a balance on your credit card, you're not alone. And you are likely hyper-aware of how much you spend in interest. Unfortunately, at the end of last year, Americans owed more than $1.12 trillion in credit card debt, according to the Federal Reserve Bank of New York. Increasing numbers of people are struggling to repay that money.

If you're unsure about how to tackle your credit card balance, start by making a repayment plan with clear goals about how much you'll pay off each month. See if you can aggressively cut your spending or increase your income, even for a short period. Put any extra cash toward your balances. Check out our guide on paying down credit card debt for more.

More widely, avoid using your credit card for spending that you can't cover. If you can't afford to buy something outright, see whether you can delay the purchase until you've saved enough. An emergency fund will let you cover unexpected and essential expenses without whipping out your card. 

Key takeaway

A lot of self-made millionaires got there by growing the gap between what they spend and what they make. The bigger that gap, the more money they have to invest. And over time, those investments can generate wealth. 

The way you bank is one aspect of building wealth, but it says a lot about your attitude toward money. Building an emergency fund, avoiding high-interest debt, and monitoring your financial situation are all habits that will help you reduce your spending and free up cash to invest for the future.